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Mgmt 4811
Micromatic SimulationMicromatic Simulation Team and Solo Versions Team and Solo Versions
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Mgmt 4812
Introduction Introduction
Simulate the workings of a small manufacturing business
Each team (? in total) will play against each other
Computer just process each companies individual decisions
Administrator (me) acts as owner, banker and industry regulator, union negotiator, etc.
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Mgmt 4813
GoalsGoals
Understand the importance of a business and strategic plan to guide business decisions
Understand the relationship between the three main financial statements
Understand the relationship between marketing, operations and finance
Understand the operational issues of production, inventory, plant and labor force
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Mgmt 4814
How to approach the simulationHow to approach the simulation
Management is a balance of art (intuition) and science (analysis of facts) combined with group dynamics
To Succeed you should:Manage your time efficiently (stay focused)Manage your business – do not guess at your
decisions
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Mgmt 4815
To Succeed you shouldTo Succeed you should
Learn from your failures– Decision rules are the same for every round– Must learn to capitalize of success and recover
from mistakesDo not worry if a little confused at start
– you will quickly move up the learning curve– Simulation requires applying your knowledge not
just listening as in lectures (fundamental shift)
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Mgmt 4816
Four Functions of ManagementFour Functions of Management
Planning
Controlling
OrganizingLeading
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Mgmt 4817
The Manager as a PlannerThe Manager as a Planner
Must develop the VisionMission Statement & Statement of Goals
& Strategies– Who are the customers, what are their needs
and how will gain competitive advantage– What are your corporate values
Low price /
High volumePremium price /
Low volume
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Mgmt 4818
The Manager as a PlannerThe Manager as a Planner
In the Simulation you are responsible for the planning in five main areas
1. Marketing2. Production3. Finance4. Sales Forecasting5. Management Dilemmas
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Mgmt 4819
MarketingMarketing – Production – – Production – Finance – Sales - DilemmasFinance – Sales - Dilemmas
Marketing Decisions Pricing
– Price sensitive marketplace unless enticed by stronger marketing efforts (oligopoly)
Promotion– Local newspaper advertising, trade publications, ad message,
salesreps, WWW promotion, product features and quality Market Research
– Can buy Market Research Information (9 types)– Price, local newspaper advertising, trade publications,
quality, WWW, salespersons, product features, units sold, all by Company, Future Sales Potential
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Mgmt 48110
Marketing – Marketing – ProductionProduction – – Finance – Sales - DilemmasFinance – Sales - Dilemmas
Production Decisions Ordering Raw Material (order + carrying cost) Product Research and Development # of Units to Produce
– Must have raw material, plant capacity & # of workers # of production workers to hire, fire or layoff
– Begin with 54 workers; can add overtime Amount of production capacity to buy or sell $ to invest in Training
– Improve productivity
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Mgmt 48111
Marketing – Production – Marketing – Production – FinanceFinance – Sales - Dilemmas – Sales - Dilemmas
Finance Decisions Short Term Loans (Line of Credit)
– Finance current operations Long term Bonds (mortgages)
– Finance expansion of plant capacity Short Term investment deposits or withdrawals
– Can invest excess cash into stable & conservative short term securities
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Mgmt 48112
Marketing – Production – Marketing – Production – Finance – Finance – SalesSales - Dilemmas - Dilemmas
Sales Forecast Decisions Based your quarterly sales forecast on your current
and future mix of pricing, advertising & investment in product quality
– Use this forecast to set production parameters; but no guarantee you will reach these forecasts
– If you misjudge your competitor's actions you will not make the forecast
– Added complication is you do not know what the economy will do.
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Mgmt 48113
Marketing – Production – Marketing – Production – Finance – Sales - Finance – Sales - DilemmasDilemmas
Management Dilemmas Periodically will introduce various management
dilemmas– Range from employee theft to union relations to
substance abuse
– There is no right answer in these dilemmas
– Responses to the dilemmas will result in different consequences
– Consequences can effect worker productivity, sales, cost of raw materials or interest rates
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Mgmt 48114
The Manager as an OrganizerThe Manager as an Organizer
Must develop the Organizational Hierarchy Organizational Chart
– List of duties & responsibilities for each position Staff the position
– Remember the dual role (student -> friendship) and (manager -> work)
Teams that have an established chain of command do better than “the herd”
Herds tend to take narrow view and focus only on a single issue– Organized groups (specialized functions) tend to keep
broader focus and are much more efficient
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Mgmt 48115
The Manager as a LeaderThe Manager as a LeaderMust decide how to influence and motivate members Goal Setting
– Balance of individual’s goal and organizational goal Will you have management hierarchy or team
approach? How will you manage your company? How will you balance the workload? Your peers will evaluate your leadership ability in
both a public and confidential manner How will you motivate under performing
members?
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Mgmt 48116
The Manager as a ControllerThe Manager as a Controller
Must deal with issues of controlMust establish a reporting systemMust develop performance standardsMust monitor key performance parameters
and take corrective steps if necessaryMust know the breakeven points for the
manufactured product
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Mgmt 48117
The Business EnvironmentThe Business EnvironmentAll companies start from identical pointAll companies manufacture identical
products Manufacturing process consists of forming
raw material (components) into finished consumer product
Produce a commodity => No customer or brand loyalty => you must “earn” each quarters sales
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Mgmt 48118
Company publicly heldCompany publicly held
Company is in start-up position – only one quarter’s (Quarter 0) info is available
John & Emily Anderscott developed business but as limited partners not allowed to perform any management duties
You will deliver reports to the board of directorsInitially no difference exists between you and
your competitors’ products– This will change as you modify promotion, pricing,
and product improvements
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Mgmt 48119
The Simulation EnvironmentThe Simulation Environment Each decision period is 3 months (1 quarter) Teams make approximately 50 - 100 decisions per
QtrThree stages:1. Forecasting Stage:
– Test “what-if” and modify decisions until have best case
2. Processing Stage:– Administrator accesses decisions of ALL companies to
determine market share allocations and individual company profitability
3. Results Stage:– Teams analyze actual versus forecasted performance.
Use this analysis to forecast next quarter.
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Mgmt 48120
To Do:To Do:Read in detail the summary and study the
decisions and reports and get familiar with the software.
Decide on Company name, organizational structure, individual job titles and responsibilities.
Begin to develop a mission statement & strategy, areas of responsibility, and duties
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Mgmt 48121
My RoleMy RoleI will be your
– Banker– Board of Directors– Regulatory Advisor– Union President– And other roles as necessary
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Mgmt 48122
As Administrator I Can ControlAs Administrator I Can Control Economic variables (industry demand, costs, and
weightings of performance variables) Introduction of management dilemmas The amount and availability of loans and
mortgages Frequency and Amount of fines (lost passwords,
late submissions, failure to get proper prior approvals, etc.)
Introduce “External Substitute” products. If everybody takes a low promotion strategy I can introduce external substitutes which creates a loss of demand for ALL companies.
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Mgmt 48123
Marking SchemeMarking SchemeVariety of methods to assign marks Team performanceThe Strategic Plan (See Assignment 1)Industry Analysis paper (See Assignment 2)Presentation of Company strategy & performance
(last week of classes)Team assignments (log book, periodic reports,
etc.)Joint Peer evaluation and division of points